COVID-19 Impacts: Companies to Focus on Mid-range Smartphones

Over the last few years, smartphone prices have skyrocketed. The price of quality Samsung and Apple flagship phones start at $1000 and upwards. Consumers are now shying away from paying a higher price for flagship phones year after another. It is just as expensive as sticking to costly internet providers in Wisconsin. They have finally realized that successive phone iterations do not offer enough innovative features that justify the high price. Hence, they are not upgrading their phones. They are holding onto their devices for up to 4 years on average.

Sales of Flagship Phones Decline

Smartphone manufacturers have started to feel the pinch. In the fourth quarter of 2019, Samsung experienced a 42% decline in its operating profit due to weak sales for the Galaxy S10 series. On the contrary, the savior of its company’s sales was Galaxy A series since it’s an affordable phone.

Even carriers and OEMs are now inviting customers to buy phones from the affordable category. Hence, why there is a rise in the purchase of junior flagship phones. They fall in the range of $300 to $600. They include all the key features that a premium phone does at half the price.

The Coronavirus Pandemic Is to Blame

Smartphone shipments throughout the world are expected to reduce by more than 10 percent this year because of the Coronavirus pandemic. This has affected all smartphones but some seem to be getting the hit more than others are.

Since carriers and retail stores were closed during the worldwide lockdown, the market was accelerated towards mid-range phones. Even though the lockdown has eased, consumer spending is subdued because of the ripple effects of the pandemic. Expensive smartphones are, therefore, in the line of fire.

Carriers need to get aggressive to jumpstart smartphone sales. Consumers struggling from the after-effects of the economic crisis caused by COVID-19 can only afford budget-friendly smartphones. The only way for carriers and smartphone manufacturers to side out the imminent recession is through the sales of mid-range affordable smartphones.

The Outlook of the Smartphone Industry

The regional smartphone market hit hardest by Coronavirus was China. The country’s smartphone shipment took a dip by 20.3 percent. Since the country constitutes almost a quarter of the worldwide shipments, it had a huge impact on the global market. The good news is the manufacturing sector in China has resumed its normal operations.

As the uncertainties of the lockdown and the economic crisis linger, many vendors are forced to reconsider their outlook for 2020. It is not only Samsung, but other phone providers have also taken the dip as well. These include:

Huawei Huawei enjoys a 17.8 percent share of the global smartphone market, even though its shipment has declined by 17.1 percent over the year. The company managed to reduce the impact by cutting the price of Mate 30 and P30 services, Honor V30, and 9X series. Their online-offline channel enabled customers to buy phones even during the lockdown.

Apple In the first quarter of 2020, Apple shipped 36.7 million Phones. Its share is 13.3 percent. Its shipments went down by 0.4 percent over the year, which is not as bad as Samsung and other smartphone manufacturers. The primary reason is the continued success of its iPhone 11 series. Apple is looking forward to launching a lower-priced iPhone in this uncertain economic climate.

Xiaomi

The company was able to survive because of Poco and Redmi products, which were launched just before the lockdown began. This helped them improve some numbers in the first quarter of 2020.

Vivo

Vivo’s market share is 9 percent. The success of its low-end and mid-range Y & S series in India helped retain the market share. However, due to a complete lockdown in India, the company faced delays in the launch of some of its products.

Replacing a smartphone, unless it is broken, is a discretionary purchase. In these uncertain times, consumers will withhold making significant discretionary purchases. This means the phone replacement cycle is going to become longer. Some smartphone companies speculated that the second quarter of 2020 would represent the peak of COVID-19’s impact. It is going to test the limits of the industry. Offline retailers will have to take a deep plunge if the government does not support them.

Summing Up

Smartphone giants like Samsung, Apple, and Huawei can weather the storm by reducing their budgets and bringing the prices of their flagship phones down to boost demand. Another approach is to introduce budget-friendly smartphones so that consumers hit by financial crunch can afford new phones.

Consumers are more concerned about essential purchases these days. For instance, they are interested in the best Internet deals so that they continue working or getting educated. It’s because they are absolutely mandatory. But buying a smartphone in unprecedented times like these, not so much.